Ministry of Emigration responds to Egyptian expatriates’ questions about tax-free car import initiative

Daily News Egypt
6 Min Read

Sahar Gendi, the Minister of State for Emigration and Egyptian Expatriates’ Affairs, met with Egyptian communities in Saudi Arabia and the United Arab Emirates during her foreign tour. She encouraged them to vote in the 2024 presidential elections and invest in Egypt.

One of the main questions she received was about the initiative to import cars by Egyptians abroad. Many expatriates suggested ways to increase their participation in the initiative and boost foreign currency inflows.

One of the demands was to equalize the deposit amount for cars with a 1600 CC engine and those with a 2000 CC engine in the Gulf region, or to reduce the difference between them. Minister Gendi said she had contacted the Ministry of Finance, and they had agreed to address this issue. She explained that the customs tariff issued by Presidential Decree No. 218 of 2022 and its amendments applied different customs tax rates to passenger cars with internal combustion engines based on their litre capacity. Cars with a litre capacity up to 1600 CC had a 40% customs tax, while those above 1600 CC had a 135% customs tax.

She also noted that Law No. 14 of 2023, which amended Law No. 161 of 2022, lowered the customs tax by 70%, requiring only 30% payment. This change aimed to satisfy the requests of Egyptians abroad, especially in Gulf Cooperation Council countries, for equal treatment with countries that had full exemption under trade agreements with Egypt.

The lower customs tax resulted in different reductions of the total customs and tax obligations depending on the litre capacity. Cars with a capacity up to 1600 CC had a 50% reduction, those up to 2000 CC had a 58% reduction and cars above 2000 CC had a 54% reduction.

Another topic that was discussed was the possibility for newly employed expatriates to benefit from the car import initiative. This would allow them to submit an authenticated work contract instead of a bank statement, and to delay the car import until they could provide the bank statement. It would also exempt the wives of expatriates in Gulf countries from the residency requirement, and accept visit documents issued by the host country as temporary residency.

The Ministry of Finance replied that Law No. 174 of 2023 allowed Egyptians with legal residency abroad, who had not benefited from Law No. 161 of 2022 before, to benefit from it, as long as they met all the conditions. They had to pay the due amount in foreign currency within three months of starting work.

The second article of the same law stated that to benefit, they had to have legal residency and a bank account abroad open for at least three months and to pay the due amount during the specified employment period. Since Law No. 174 of 2023 was effective from October 30, 2023, for three months and could be extended, any changes to it might be delayed until the end of its validity.

The Ministry of Finance has responded to some complaints and proposals from Egyptians abroad regarding the initiative to import cars for relatives with tax exemptions.

Some expatriates who imported cars before the 70% tax reduction could not reclaim the deposit difference. The Ministry of Communications and Information Technology announced that an application for refund requests would be available from 6 December 2023, for those who met the legal conditions. Many eligible citizens have already received their refunds.

Another proposal was to allow expatriates to buy cars from local dealers, not just from duty-free zones. The Ministry of Finance said it was studying this proposal, which involved creating a dollar account for each local dealer, managed by the ministry. Expatriates would transfer the car’s value in foreign currency to this account, which would then be transferred to the local agent’s bank for issuing documentary credits. Local agents would negotiate with foreign suppliers for longer payment periods or faster payment discounts. Any discount amount would be shared with or returned to the state.

The ministry emphasized that the transfer to the local agent’s account would only happen after the citizen received the car at the deposited price, without any extra fees. It also said it would select a list of local dealers and car specifications, based on fair and competitive prices, and exempt them from any costs that could increase the car’s value. It encouraged local agents to offer promotional services to attract more customers.

The ministry said it was coordinating with the Central Bank of Egypt and the Ministry of Trade and Industry to review the proposal, in line with the import regulations and the responsibilities of the local agents as importers.

The car import initiative is part of the law granting certain facilitations to Egyptians abroad, which is overseen by a committee formed by Prime Ministerial Decree No. 4270 of 2022. The committee includes representatives from various ministries, the Central Bank of Egypt, and the National Bank of Egypt.

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